How does the timesheet to invoice cycle work on a contract desk?
A contractor logs hours against a placement, the client approves the timesheet, and those approved hours generate two documents: a sales invoice to the client at the charge rate, and a payment to the contractor at the pay rate. The difference between the two is the agency's margin, and it is only real once the client actually pays.
The cycle is weekly on most desks, and every week it repeats for every live contractor. That repetition is the whole problem: a desk with forty contractors is running forty of these in parallel, and the failure modes are boring and constant. A timesheet not submitted. An approver on holiday. An invoice raised at the old rate because a rate change was agreed on a call and never recorded.
The thing that makes contract finance different from perm is that the money moves continuously rather than once. A permanent placement is one fee, one invoice, one rebate window. A contract placement is a running obligation in both directions, where the agency pays the contractor whether or not the client has paid yet.
That is where cash gets uncomfortable. Pay terms with contractors are usually shorter than payment terms with clients, so a growing contract book consumes cash even while it is profitable on paper. Agencies that grow contract quickly and watch the bank balance fall are not doing anything wrong; they are funding the gap.
What helps is having the whole chain on one record: the placement, its rates, the approved hours, the invoice raised, the payment received. When those live in separate systems, margin is a calculation someone does at month end rather than a number you can look at on a Tuesday.